Proposed legislation in India that would restrict the use of cryptocurrencies as a method of payment also intends to make people who disobey the law susceptible to arrest without a warrant and detention without bail, according to a source and a summary of the draught reviewed by Reuters.
Prime Minister Narendra Modi’s government has already declared that it plans to outlaw most cryptocurrencies, a move that follows China’s intensification of its anti-cryptocurrency crackdown in September.
According to the bill’s description, the government seeks to impose a “wide prohibition on all operations by any individual on mining, creating, holding, selling, (or) dealing” in digital currencies as a “medium of exchange, store of value, and a unit of account.”
Breaking any of these regulations would render you “cognizable,” meaning you might be arrested without a warrant, and “non bailable,” according to the document.
The insider, who has firsthand knowledge of the incident, requested anonymity since he was not authorised to speak to the media. The finance ministry did not respond to an email requesting comment.
Despite the government’s declared desire to encourage blockchain technology, lawyers warn that the proposed regulation will hurt the technology’s application as well as the non-fungible token market in India.
“Blockchain development and NFT will be effectively blocked if no payments are allowed at all, with no exception granted for transaction fees,” stated Anirudh Rastogi, founder of law company Ikigai Law.
The government’s plans to stifle cryptocurrency trading have caused a market frenzy, with numerous investors losing a lot of money.
Due to a deluge of ads and growing cryptocurrency values, the number of investors in crypto assets has increased in India.
Despite the lack of official data, industry estimates show that the country has between 15 and 20 million cryptocurrency investors, with total crypto holdings of roughly Rs 45,000 crore ($6 billion).
The government now aims to crack down on marketing that seek to entice new investors, according to the bill’s drafting summary and the source.
Self-custodial wallets, which allow consumers to keep digital currencies outside of exchanges, are also likely to be banned, according to the source.
The harsh new laws, according to the bill’s drafted summary, are based on the central bank’s profound worries about digital currencies and are intended to put in place protections to ring-fence the traditional banking sector from cryptocurrencies.
According to the draught summary, the Securities and Exchange Board of India (Sebi) will govern crypto assets.